The Cost of Selling a House and How You Can Save

Selling a home is an exciting journey for many Veterans, especially in a seller's market. You may be eager to cash out all the equity you've built up and put it towards a bigger home in your dream neighborhood.

But before you start making offers on a new house, it's important to know that not all of those home sales proceeds will end up in your pocket. Selling a house can come with a few major expenses, which might average about 10% to 15% of the sales price.

From agent fees to seller concessions, here's a look at the typical expenses involved in selling a house. While some of these costs are optional, they could help you receive a better offer for your home.

The above chart provides an estimated value for common home selling expenses. The exact expenses you incur when selling your home will depend on your unique circumstances. You might not encounter all of the above selling expenses, or you may run into additional expenses that are less common among home sellers.

Real Estate Agent Commissions

Agent commissions generally represent one of the largest expenses when selling a home. Historically, this fee included what you pay to both agents—yours and the buyer’s—for their work in marketing and showing your home, as well as arranging the sale. Most times, buyer’s agents don’t charge a fee to their clients, so the seller is responsible. For instance, if the buyer is using a VA loan, real estate broker or agent fees are non-allowable.

According to a 2023 NAR research report, about 89% of home sellers worked with a real estate agent to sell their home, and 75% of sellers provided the agent’s compensation.

Commissions for the seller’s agent and the buyer’s agent typically amount to between 5% and 6% of the home sale price. In some cases, you can negotiate the agent’s rate, but this depends on the specific parties involved.

But changes are likely coming related to buyer’s agent compensation in the wake of a landmark proposed court settlement involving the National Association of Realtors. It’s possible, if not likely, that the old model of sellers paying the commission of both agents are numbered.

Make sure to ask specifically what an agent charges when trying to find the right one. You could even offer to do some of the work involved when selling your home in exchange for a reduced commission. However, if you do negotiate a lower rate, be sure to get it in writing.

Property Taxes and Fees

Government entities, homeowner's associations and other organizations can also eat into sales proceeds. While the price of these fees varies by location, your agent should have a good idea of how much to budget.

• Real estate transfer tax: Some states and local municipalities charge a tax on the transfer of property from one owner to another. It's generally only a small percentage of your home's sale price, but it can reach as high as 4%. Check the laws in your area to factor in this cost.
• Property taxes: Usually, you’ll owe a prorated amount of property taxes as a part of the seller’s closing costs. Your taxes may be lower if you already paid property taxes as part of your monthly escrow payment. If so, you could actually receive a tax rebate after closing.
• Homeowner's association (HOA) fees: If your property is part of an HOA, you might have to settle any outstanding dues or negotiate with the buyer about paying the current year's fees.

There may also be smaller fees for things such as wire transfers, recording and settlement fees or legal fees for a real estate attorney.

Capital Gains Tax

The profits from your home sale may be subject to capital gains tax—a tax imposed on the sale of an asset—if they exceed $250,000 for singles or $500,000 for married couples filing jointly. The fee usually depends on how long you’ve owned the home, your filing status and how much you profit from the sale. The capital gains tax rate is 0%, 15% or 20% on most assets held for longer than a year.

However, there are strategies to reduce this liability, such as documenting home improvement expenses or meeting the requirements for the home sale tax exclusion.

Seller Concessions

The most unpredictable expense on the list is seller concessions. This is a catch-all category for anything a buyer might ask for to seal the deal. Sellers are often expected to cover the costs of title searches and title insurance, both of which help guarantee that the buyers won't encounter any problems with their home's title. But buyers may also ask for concessions to cover other things, such as specific repairs or a portion of their closing costs.

There's usually a limit to how much buyers can ask for, and this varies by loan type but ranges from 0% to 6% of the selling price. Concessions on a VA loan, for instance, can't exceed 4% of the home’s price. Also, keep in mind that you don't have to say yes to every concession. Buyers have more leverage to ask for these in a buyer's market.

Current Mortgage Payoff

If you still have an outstanding balance on your mortgage, that will likely be the largest line item on your list of home sale expenses. When you sell your home with an existing mortgage, your current lender will take the first cut of the proceeds to pay off your home loan’s balance and any outstanding interest due. The leftover amount pays for other closing costs—and potentially a down payment on your new home.

Before you start the sales process, check your current mortgage documentation to make sure it doesn't include a prepayment penalty. For example, VA loans don’t have a prepayment penalty, but some charge a fee if you pay off your entire balance early—usually within 3 to 5 years. If yours includes this penalty, you'll need to account for that additional fee.

If you used a VA loan to purchase the home you’re now selling, it’s important to understand how your VA entitlement is affected. Your entitlement is tied up with your property until the loan is fully repaid. So, if you sell your home and pay off the loan balance with the profits, your full entitlement will be restored.

If the prospective homebuyer is a Veteran with a VA loan, you could possibly have them assume your VA mortgage, potentially saving on some closing costs. This is a great selling point for Veterans and might influence your home's marketability.

Home Repairs

Home repairs and improvements are a key part of the process when it comes to selling your home. This comes into play when you're marketing and showing the home, as well as negotiating with the buyer.

In the marketing stage, home improvements can add value to your home and help you raise the asking price. Keep in mind that some improvements will raise your home value more than others.

After your house is under contract, the seller may also ask for specific repairs. If a home inspection raises red flags, certain issues can become deal-breakers and create additional expenses for you as a seller. Some of these are negotiable, but you should expect at least a few repair requests from the buyer.

Moving Costs

Moving all your belongings into a new house isn't cheap, and it's another cost of selling a house you should consider way ahead of time. Costs can vary significantly based on whether you handle all the packing and moving or hire movers to do it all.

According to Moving.com data, full moving services average anywhere from $500 to $3,000 for a local move, whereas costs for a long-distance move can range from $1,100 to $15,000 or more depending on the size of the home and how far you’re moving.

As you're planning your home sale, don't neglect to think through the moving process. What will you have time for? How complicated will the move be? If you're moving for a job, does your employer offer relocation assistance? Your answers to questions like these will help determine the cost of your move.

Optional Home Sale Costs

There are also some optional expenses when you sell your home. Here are some things you might choose to do to make your home more attractive before selling.

Pre-listing Inspection

Although a home inspection is usually a standard part of the sales process after you're under contract with a buyer, some sellers may benefit from getting an inspection before listing their home. This is a good way to learn about any major problems sooner rather than later, especially if you are selling an older house. That way, you can address any important repairs ahead of time and take those issues off the table.

A pre-listing inspection will cost you around $350 upfront according to HomeAdvisor. Before you get one, talk to your agent about whether it's a good idea. In some cases, a pre-listing inspection could do more harm than good. If the inspection reveals issues you're not going to address, you might legally be required to disclose them to potential buyers.

Home Warranty

A home warranty is a nice perk to offer buyers if you want to help ease their minds and encourage a sale. Specific terms of home warranties vary, but they're generally designed to cover any major appliance breakdowns or home system failures.

A one-year warranty costs between $350 and $600 on average. It's a small expense if it helps you speed up the sale, especially if you're selling in a buyer's market or have older appliances or home systems you don't plan to replace.

Home Staging

If you're planning on moving out before selling or you don't have the most appealing furniture and decor, you may want to consider hiring a home staging company. These interior design and layout experts help you arrange and decorate your home to make it more attractive and inviting for potential buyers.

According to HomeAdvisor data, staging a home usually costs between $750 and $2,800, but the exact price depends on how many rooms you stage, whether you provide the furniture and how long you use the service.

How to Save Money When Selling Your House

Not every cost of selling a home is essential, and there are ways to save. Here are a few things you can do to bring your costs down.

1. Sell Your Home Yourself

You can't avoid every expense when selling your home, but you can cut some by handling some aspects of the process yourself. Maybe you can skip hiring movers, for instance. You can also cut out a seller's agent's commission by selling the home "for sale by owner" (FSBO).

Realize, though, that this may not help you overall. You may be sacrificing how much money you can profit from your home sale by not having a real estate agent.

2. Find a Low-Commission Real Estate Agent

Real estate agent commissions can vary and depend on the specific agent or brokerage. Some agents offer lower rates, so it's essential to research and compare different agents to understand what services they offer for their fees. Some may offer a full suite of services at a lower rate, while others might provide a more a la carte approach, allowing sellers to pay only for the services they need.

Negotiating with prospective agents about their commission rate is also a wise strategy. By presenting your case, including the potential ease of sale or the level of preparation you've already put into the home, you might secure a lower rate while also finding an agent that fits your needs.

Keep in mind that the cheapest option isn't always the best. Consider the agent's experience, local market knowledge and the services provided to ensure you're getting the best value for a lower commission rate.

3. Negotiate Closing Costs

Negotiating closing costs effectively can lead to significant savings when selling your home. Many of these fees are not set in stone and offer room for negotiation, which can reduce your financial burden.

To strategically negotiate closing costs, you must understand each fee listed in your closing documents. Identify which costs are mandatory and which are variable. For variable fees, such as title insurance, settlement services and certain administrative fees, it’s best to explore several service providers to find the best deal.

Another tactic involves directly negotiating with the buyer. In some instances, sellers can agree to lower the sale price of the home in exchange for the buyer agreeing to cover specific closing costs. This can be particularly appealing in competitive markets or if the buyer requests concessions or repairs during the negotiation phase.

4. Cut Optional Costs

The most obvious way to save on your home sale is to limit additional costs. Home staging, home warranties and pre-inspections are all optional. Consider skipping these activities if you're attempting to keep costs down.

Also, consider selling your home to a VA buyer and having them assume your current VA loan, which can cut some closing costs and lead to a faster home sale.

5. Choose the Right Time to Sell

Some of these home sale costs will depend on the market. If you sell your home in a hot seller's market, you could have enough leverage to refuse seller concessions or any extras the buyer requests. Selling a house can be an expensive proposition. But if you time your home sale right and plan ahead, you could walk away with enough profits for a nice down payment on your new home.